Thriving in uncertain times
I’d rather be writing about entering new markets, building partner channels, and making the most of your Microsoft partnership. However, to add to the current uncertainty of high inflation, war in Ukraine, VC’s throttling back on investment, the UK finance minister has just launched a fiscal event to stimulate growth. Hence, I feel I should do one more article on surviving and thriving in a time of economic uncertainty.
A piece of ancient wisdom that I’ve found very helpful is ‘Be sure you know the condition of your flocks, give careful attention to your herds: for riches do not endure forever’. Given that most of you looking at this are leaders in tech businesses and not sheep farmers, our equivalent of flocks and herds are our customers, the products and service we offer, our staff, and the company balance sheet.
What should you look for to know the condition of your flocks? Here are some questions to help you determine their condition and some actions to improve it.
Customers
Are they financially sound? Key actions: ensure your credit checks are up to date, and pay attention to any market intelligence e.g. people being laid off, payments taking longer than usual.
Do they pay you on time? Key action: enforce your payment terms.
Do they value what you do? Key action: there is always at least one customer who is more trouble than they are worth. Review the hidden costs of doing business with them. Now is a good time to part company with them if they are eroding your profitability.
What growth opportunities exist? Key actions: investigate new ways to help your customers and ask for referrals.
Products and Services
Are they competitive against your rivals offer? Key actions: analyse every lost deal to learn why and benchmark your offer against your rivals.
Are they profitable? Key actions: Analyse the full cost of delivering each product and service. Prune offers that do not meet your target margin.
How long are they likely to remain competitive and profitable before needing refreshing/replacing? Key action: Maintain a roadmap of your main offers.
Staff
Are they engaged with your business’ mission? Key action: ensure your staff know why they do what they do – assuming, of course, that your business has a higher purpose than making the owner rich.
How well do they work as a team? Key action: ensure the quiet ones feel heard.
Do they have the opportunity for personal development? This is the number one way of reducing staff churn. Key action: ensure all staff have a personal development plan that they value
Balance Sheet
How strong is it? Key action: review it and take the opportunities to strengthen it now.
Have you got enough cash? Cash is king. If you have cash, you can survive. Key actions: run regular cash flow forecasts. Enforce payment terms. Pull forward any planned finance raising.